You may be familiar with Stamp Duty Land Tax (SDLT) being the sting in the tail of any residential property transaction that exceeds certain thresholds.

What may not be known to those new to business is that SDLT may also be payable by the buyer in commercial property transactions.

The rates are:

Purchase priceSDLT rate
Up to £150,000Zero
The next £100,000 (the portion from £150,001 to £250,000)2%
The remaining amount (the portion above £250,000)5%

These rates must be paid in relation to a purchase of non-residential property including:

  • commercial property, eg shops or offices
  • agricultural land
  • forests
  • any other land or property which is not used as a residence
  • 6 or more residential properties bought in a single transaction

The rates are also applicable where the property purchased is ‘mixed use’ i.e containing both residential and non-residential elements (for example where a flat is connected to a shop).

Leasehold Properties

When the non-residential or mixed use property is new and you are acquiring a leasehold interest rather than freehold, SDLT must be paid on both the:

  • purchase price of the lease (the ‘lease premium’) using the rates for freehold above; and
  • value of the annual rent you pay (the ‘net present value’)
  • These are calculated separately then added together.

If you buy an  existing (“assigned”) lease, you will only pay SDLT on the lease price (the “Consideration”).

Net present value of rentSDLT rate
£0 to £150,000Zero
The portion from £150,001 to £5,000,0001%
The portion above £5,000,0002%

 Am I Eligible for Any SDLT Reliefs?

Some transactions may qualify for relief, which can reduce the amount of tax you pay.

Examples include:

  • Group Relief

If the property is owned by a company within the same group as the purchaser on the date of the transaction, SDLT will not be payable.

  • Charities Relief

Charities can get relief from SDLT when they buy land and property for charitable purposes. There may also be partial relief if the purchase is made jointly with a non-charitable entity. HMRC can withdraw the relief if the property reverts to non-charitable use or the charity’s charitable status ceases within 3 years of the transaction.

This list is not exhaustive and other reliefs may be available.